Simeka boosts revenue

Revenue for the year to May will show an improvement of between 25% and 30%, says listed outsourcing company Simeka Business Group.

However, the cheaper price it paid for SAB&T Ubuntu, after warranties were not met, has hampered earnings, it notes.

The empowered group is involved in outsourcing, business support services and technology. It has been listed on the JSE's Alternative Exchange since 2004 and has a presence in SA, Africa, the Middle East and the UK.

It says operating profit will be between 20% and 30% higher, with cash flow from operations expected to show the same improvement when it reports its results today. Last year, Simeka reported revenue of R597 million and operating profit of R92 million. Net cash flow from operations was R63.9 million.

However, due to accounting rules, relating to it receiving back some shares for the SAB&T Ubuntu deal, diluted headline earnings per share are expected to be down to 10.6c, compared with last year's 15.5c.

Simeka says it received independent advice on how to treat certain issues, such as the shares it holds in treasury and the stake it clawed back for the SAB&T Ubuntu transaction. The result was that earnings were affected, it says.

In June, the company stated it had received a discount on its purchase of SAB&T Ubuntu. As a result of warranties relating to R31.7 million that was not collected, 53.2 million shares were returned to Simeka, calculated at a value of 59.5c a share.

Simeka initially bought all of SAB&T Ubuntu for 150 million of its shares, at 82c a share, which took the total payment to R123 million.

Companies are required by the JSE to inform shareholders as soon as they are aware earnings will differ by more than 20% from the previous period.

Related stories:

• Simeka rethinks SAB&
• Simeka reports strong results

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